Oil steadied, reversing earlier losses, as traders assessed Chinese measures to protect economic growth in the world’s second-biggest fuel user.
Futures rose 0.4 percent in New York, tracking a recovery in commodities also closely linked to global growth such as nickel and copper. China announced a major tax cut after an annual report by the country’s premier lowered targets for the expansion in gross domestic product to the slowest in almost three decades.
“The biggest tax cut package in China’s history is likely to be passed,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Guess what effect it will have on the economy.”
Oil has rallied about 24 percent this year as OPEC and allies including Russia restrain production to avert a supply glut. But the surge has been capped by worries about demand as the global economy looks increasingly fragile amid China’s prolonged trade dispute with the U.S.
West Texas Intermediate for April delivery rose 22 cents to $56.81 a barrel on the New York Mercantile Exchange at 12:06 p.m. London time. It climbed 79 cents on Monday as the U.S. and China were said to be near a trade deal.
Brent for May settlement added 12 cents to $65.78 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude’s premium over WTI for the same month narrowed to $8.62 a barrel.
Oil’s gains were capped as Libya restarted its biggest oil field, complicating efforts by other members of the Organization of Petroleum Exporting Countries to avert a global surplus. The nation’s Sharara field, with the capacity to pump 300,000 barrels of crude a day, will be fully restored in the coming days after the site was re-secured, ending a three-month occupation, according to the National Oil Co.
Other oil market news U.S. Energy Information Administration data due Wednesday will probably show that the nation’s crude inventories swelled by 1.05 million barrels last week, according to a Bloomberg survey of analysts. If that happens, the stockpile would have increased in six of the past seven weeks. The market has already lost at least 100,000 barrels a day of Venezuelan crude exports and supply may dip further due to U.S. sanctions, Goldman Sachs analysts including Michael Hinds and Jeffrey Currie said in report dated March 4. Russia’s Rosneft PJSC is sending the first cargoes of heavy naphtha to Venezuela since U.S. sanctions were imposed. The compound is used to thin the sludgy Venezuelan crude so it can move through pipelines to the coast.